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Digital Single Market - geo-blocking of digital content

The Competition Commissioner, Margrethe Vestager, has today published her initial findings on geo-blocking, as part of the ongoing e-commerce sector inquiry. The inquiry, which was launched in May 2015, forms part of the Commission-wide digital single market initiative (see our previous posts here, here and here).

The Commission has found that geo-blocking is widespread in the EU, particularly for digital content. Geo-blocking is a technical practice which prevents consumers from accessing online content based upon residence. Technical restrictions which prevent consumers from purchasing goods from other countries are considered alongside content restrictions in this report. The fact sheet, and accompanying press release, provide significant insight as to how EU competition law may apply to such practices.

First, the Commission recognises that unilateral business decisions not to sell into different territories, when made by a non-dominant company, do not raise competition law issues. However, the Commission fails to comment on whether unilateral geo-blocking by dominant companies could be anticompetitive, leaving the door open for future enforcement…

Second, the Commission reiterates its concern that geo-blocking linked to agreements between suppliers and distributors may be anticompetitive. The Commission found that 12% of retailers and 59% of digital content providers face contractual restrictions to geo-block. Vestager indicates that DG Competition will be taking a closer look at these arrangements. She accepts that there may be legitimate reasons to geo-block but plans to address ‘unjustified barriers’ (without indicating what they might be).

Looking ahead, it will be interesting to see how Vestager’s findings fit in with the broader digital single market initiative. Particularly in relation to digital content, and in the context of the Commission’s ongoing Hollywood Studios Investigation, little headway can be made without reform of copyright law – there have already been a number of legislative proposals in that area, with further proposals due in May.

Vestager today promised that the Preliminary Report in the e-commerce sector inquiry is on the horizon, due to be published in mid-2016. In the meantime, we will be assimilating the full report, and picking up on points of interest.

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